Pittsburgh: Houston on the Monongahela

Western Pennsylvania region is once again a hotbed of energy production and manufacturing

By James D. SawyerSenior Editor

From the start of coal mining 250 years ago in western Pennsylvania to the drilling of the world’s first oil well in 1859, the region around Pittsburgh has been known as a source of North American energy. In recent decades the main focus has shifted farther west. Today, though, the area is again in the ascendant thanks to natural gas production in the Marcellus Shale play. Manufacturing is one of the beneficiaries, as I learned during a two-day visit to the region sponsored by the Pennsylvania Department of Community and Economic Development.

Overall, the broad spectrum of advantages of the natural gas boom includes:

• More domestically sourced energy and less dependence on foreign petroleum• Lower winter energy bills for those who heat their homes with natural gas• Inexpensive and plentiful feedstock from which to make plastics, etc.• Inexpensive energy for manufacturing• New jobs in natural gas exploration, drilling and production• A resurgence in manufacturing jobs, particularly those producing equipment and components for natural gas recovery.

About two-thirds of the Marcellus Shale underlies Pennsylvania (Ohio, West Virginia, New York and Maryland cover the rest). Washington County, PA, immediately southeast of Pittsburgh, provides a great example of the impact of the Marcellus Shale on jobs. According the Bureau of Labor Statistics, between March 2010 and March 2011, Washington County enjoyed the nation’s third best growth rate in employment at 4.3%. More startling, in January 2010, the county bore the burden of a 10% unemployment rate. As natural gas production picked up steam (sorry for the mixed metaphor), the rate dropped to 6.8% by October 2012.

Chevron is a big player in the Marcellus. So much so that in October it held a supplier forum to educate companies that would like to work with the petroleum giant, Michael A. Frazer, supply chain manager for Chevron’s Appalachian/Michigan Strategic Business Unit, told the tour group. Suppliers who missed the forum but are interested in working with Chevron, Frazer said, can learn what it takes by visiting the company’s supplier Web site.

After meeting with Frazer in downtown Pittsburgh, we bussed over to Aggressive Grinding Service (Latrobe, PA) for a tour of the facility and to learn how the Marcellus has impacted its operations. Aggressive offers precision carbide and ceramic grinding on materials used in high-wear oil and gas applications such as drill bits, bushings and nozzles. The company also supplies the aerospace, mining, construction and manufacturing industries.

“We’ve been doing work for the oil and gas industry for over 20 years,” said Aggressive CEO Lester Sutton. “We have seen a 20% increase in our oil and gas business” since the work in the shale play took off in earnest over the last two to four years.

To handle the extra work, in the past year the company bought four new ID grinders from Usach Technologies (Elgin, IL). Aggressive also recently announced a $1 million, 14,000-ft2 expansion for its ceramics division.

We next stopped at the Elliott Group (Jeannette, PA). Now owned by Ebara Corp. (Tokyo), Elliott was founded in Jeannette in 1910. It designs, manufactures and services steam turbines, power recovery expanders and centrifugal and axial compressors in Jeannette; Belle Vernon, PA; and Sodegaura, Japan. Some of the ways these products address the needs of the oil & gas industry are in:

Today things are going so well to that the press material Elliott provided us contained a list of job opportunities for nine skilled workers and 28 professionals. The picture has not always been so rosy in Jeannette, though.

In 2006, said COO Art Titus, Elliott was making plans to close its Jeannette operations within two years. The oil and gas boom intervened, and now—because companies order its products two to three years in advance of delivery—Elliott’s order book is in handsome shape.

“We are not capacity constrained,” however, said Titus. “We are trying to invest to stay ahead of the curve. We are also hiring in advance of need in order to anticipate retirements.”

Dura-Bond Industries’ facility in Duquesne, PA, was the next stop of the tour. A brand-new plant that went into operation less than three weeks prior to our visit, the facility applies a coating to underground oil and gas transmission piping to combat corrosion.

The new facility sits on 56 acres and contains 60,000 ft2. Employment currently totals 75 full and part-time workers.

“When the plant gets up to full speed,” plant manager Michael E. Reeder said, “we are looking to run at a maximum rate of 80 ft/min.” Currently the facility is running at about 40’ of pipe per minute as it works the kinks out. That is about the same rate that the nearby McKeesport plant ran at. The older facility is being upgraded to include the newer technology used in the Duquesne operation. That would give the two plants a combined maximum throughput of 150 ft/min or more.

“About 80% of our output is going to a shale play,” said Reeder, “mostly Marcellus. All of our production is spoken for; none of it is for inventory.”

The tour wrapped up with a visit to Aquatech International Corp. (Canonsburg, PA). The company is the beneficiary of being in the right place at the right time. Founded in 1981, Aquatech supplies water purification technology to industrial and infrastructure markets with a focus on desalination, water reuse and zero liquid discharge.

“The Marcellus play has had a significant impact on our manufacturing, engineering and field service and operations activities,” said Devesh Mittal, vice president and general manager of the Shale Gas Division.

The fracking used to extract natural gas from shale requires a lot of water, and leaves the water laden with dissolved solids that must be removed to meet environmental regulations. Aquatech uses an integrated application of both thermal and nonthermal technologies to achieve cost efficiencies. Because gas production in the region often lies far afield, fixed treatment plants are not always an inexpensive and convenient way to treat water from wells in the Marcellus. When customers came calling for a solution in 2008, Aquatech was able to adapt its fixed water treatment units to mobile units within the course of a year.

When asked if Aquatech was serving other shale region Mittal, said, “Pennsylvania is a critical market for us and it is being addressed first.” He did note, however, that the company’s R&D lab in Milwaukee has developed a new product for treatment of water used in oil sands, such as those found in western North America.